The long-term effects of climate change on the global economy and the technology industry in particular are unclear. Nevertheless, we recognize that there are inherent climate-related risks wherever business is conducted, including both physical and transition risks. Physical risks, including but not limited to the increasing frequency of extreme weather events and their impact on critical infrastructure in the United States, Australia and elsewhere, have the potential to disrupt our businesses, our employees, our third-party suppliers (including the third-party cloud infrastructure providers and data centers on which our products depend), and/or the businesses of our customers, and may cause us to experience extended product downtimes, higher attrition, and losses and additional costs to maintain and resume operations.
The global transition to a lower-emissions economy may also give rise to transition-related risks, including the introduction or expansion of climate-related laws and regulations, the emergence or expansion of carbon pricing mechanisms, increased costs of energy and cloud infrastructure, changing customer and stakeholder expectations, and shifts in market or stakeholder behavior related to climate change. These transition-related risks could increase our operating costs, including the costs we incur from our third-party cloud infrastructure providers, and could otherwise adversely affect our business, results of operations, and financial condition. Additionally, expanding AI workloads and inference scaling require significant data center capacity and energy consumption across our value chain; volatility in energy markets, power grid disruptions, or carbon-pricing mechanisms could increase the costs passed through by our third-party cloud infrastructure providers.